Netflix Password Sharing: Is It Piracy?

Netflix might have upset many users by raising the price of its HD plan by $1 to $9.99 per month. To overcome the price rise, many could be considering splitting their Netflix account with a friend or a relative, but this will be counted as a kind of light piracy, says a report from The Next Web.

Is password sharing a threat to Netflix?

An article by MarketWatch includes comments from Goldman Sachs Analyst Heath Terry, who suggests the possible intent of Netflix behind targeting the HD plan. “We believe a targeted price change like this is designed to reduce excessive password sharing by incentivizing users to switch to the 1-screen plan,” Terry said.

The price of both single screen streaming plans and the two-screen HD plan is the same at $7.99. An important question is whether password sharing outside the home is really a piracy threat to major companies like Netflix.

The answer to this is no, but this does not mean that it is not prevalent, the report says. In a study earlier this year, Parks Associates found that nearly 57% of the U.S. households access an over-the-top video account, which could be Netflix, Hulu or HBO Go, but 11% of Netflix, 10% of Hulu Plus and 5% of Amazon Prime Instant Video subscribers make use of an account for which payments are made by someone else.

The biggest users of the password sharing trend are young adults in the age group of 18-24. About 22% of the users who were part of the survey admitted that they used a video account that did not belong to them.

Password sharing could become a crime one day

Park Associates estimates that the industry is incurring losses of $500 million per year due to “illicit password sharing.” So, is the price hike really about the sharing of passwords?

If past on-the-record comments by Netflix CEO Reed Hastings are considered, then the answer to the question is no, but this does not mean that the company condones this practice. Even if someone shares passwords with friends just to watch the latest episode of Game of Thrones, then it is a very marginal form of privacy, the report says.

The concept of password sharing will surely gain more prominence when cord-cutting becomes the norm and nearly all modern media consumption is comprised of these subscriptions.